SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: December 16, 1997
Date of earliest event reported: December 12, 1997
LINCOLN NATIONAL CORPORATION
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(exact name of registrant as specified in its charter)
Indiana 1-6028 35-1140070
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(State of Incorporation) (Commission File Number) (IRS Employer
Identification No.
200 East Berry Street, Fort Wayne, Indiana 46802-2706
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(Address of principal executive offices) (Zip Code)
219-455-2000
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(Registrant's telephone number)
ITEM 5. OTHER EVENTS
Set forth below is the text of a press release issued by the Registrant
on December 16, 1997.
LINCOLN NATIONAL TO TAKE 4TH QUARTER CHARGES
TOTALING $287 MILLION, AFTER-TAX,
RELATING TO U.K. PENSIONS AND PERSONAL ACCIDENT REINSURANCE
WILL REPORT 4TH QUARTER GAIN OF $777 MILLION, AFTER-TAX,
FOR SALE OF AMERICAN STATES STAKE
FORT WAYNE, Ind., Dec. 16, 1997 --Lincoln National Corporation (NYSE:
LNC) announced today that it will report three unusual items in its fourth
quarter results. LNC said two of these items are special charges totaling
$287 million, after-tax, while the third is a gain of $777 million, after-tax,
from the sale of its stake in American States Financial Corporation. As a
result, net income for the fourth quarter of 1997 will be increased by $490
million, or $4.83 per share.
The two charges are $173 million, after-tax, to strengthen reserves for
settlement of pension misselling liabilities with regard to Lincoln UK and
$114 million, after-tax, to strengthen reserves for claims on certain
excess-of-loss personal accident reinsurance programs written in the London
market by Lincoln Re.
"With our reserves strengthened, LNC will enter 1998 well positioned to
compete even more effectively in the dynamic financial services market," said
Ian M. Rolland, chairman and chief executive officer. "With a clear business
strategy, sound balance sheet and strong management team, we are determined to
further improve LNC's financial performance and increase shareholder value."
The charge against earnings for Lincoln UK stems from misselling of
pension products in the late 1980s and early 1990s. The British regulatory
agencies concluded that financial institutions misled many individuals who
bought pension products as an alternative to participation in employer-
sponsored defined benefit plans. As a result, insurance companies and other
financial institutions have been ordered to review many of the policies they
sold, determine how individuals have been harmed and provide redress. Lincoln
UK has been conducting an extensive review in an effort to settle its cases,
including cases that came to Lincoln UK from three acquisitions. Substantial
additional personnel and expertise have recently been contracted to complete
the review. Although liabilities totaling $81 million were established when
the companies were acquired and pretax charges of more than $41 million were
taken against earnings in the last five years, recent settlement experience,
regulatory guidance and information now available indicates that substantial
strengthening of reserves is required at this time.
The charge against earnings for Lincoln Re involves certain
excess-of-loss personal accident reinsurance programs created in the London
market and participated in by Lincoln Re in the years 1993 through 1996.
Investigations and audits of ceding companies conducted in the last few months
have led LNC to conclude that many more claims will be reported on these
programs than previously estimated. LNC is investigating the manner in which
the programs were designed and intends to pursue negotiated settlements and
consider all available legal remedies concerning these programs. Nevertheless,
current analysis indicates that reserves need to be strengthened.
LNC will realize a gain of $777 million, after-tax, including $177
million of previously unrealized securities gains, in the fourth quarter.
This stems from the sale of LNC's 83.3 percent stake in American States
Financial Corporation on October 1, 1997. Proceeds have been used to pay down
debt and repurchase $281 million in common stock as of December 12.
LNC holds a prominent position among financial services companies with
$120 billion of assets under management and $5.0 billion in annual revenues.
Its wealth accumulation and protection products include annuities, life
insurance, 401(k) plans, life-health reinsurance, institutional investment
management and mutual funds.
For further information, contact:
Media Analysts
Scott M. Bushnell Daniel W. Weber
219/455-7512 219/455-2336
[email protected] [email protected]
Signature Page
LINCOLN NATIONAL CORPORATION
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, hereunto duly authorized.
LINCOLN NATIONAL CORPORATION
BY: /S/ RICHARD C. VAUGHAN
Richard C. Vaughan
Executive Vice President and
Chief Financial Officer
Dated: December 16, 1997
